Download A Strategic Marketing Perspective

High Impact Negotiating: A Strategic Marketing Perspective
Alvin J. Williams, Ph.D., Professor of Marketing
University of Southern Mississippi, Hattiesburg, MS 39406
601/266-4634; [email protected]
91st Annual International Supply Management Conference, May 2006
Abstract. Successful negotiating is an integral part of sustained supply performance within
supply chains and across networks. Since both negotiating and marketing are key drivers of
value, it is important for supply professionals to take a ‘marketing approach’ to the
development and execution of workable negotiating strategies in dynamic supply
environments. More specifically, the paper highlights the mechanics of ‘how’ to implement a
marketing mindset across the array of negotiating challenges in supply.
Introduction and Background. Given the seminal role of negotiating in all facets of supply
chain management, it is imperative that practitioners and researchers continue to explore
alternative angles from which to view negotiating phenomena at both the macro and micro
levels. Successful supply professionals are careful, judicious, and innovative in applying the art
of negotiation, both internally and externally.
Internally, purchasers negotiate frequently in settings dominated by cross-functional
orientations. Purchasers expect cross-functional teams to deliver enhanced communications,
joint ownership of problems, and more clarity in identifying and resolving problems, and
increased creativity as related to overall effectiveness (Monczka, Trent, Handfield, 2005). To
achieve some of the expected goals above, considerable negotiation activities transpire over
time, modality, settings, and personalities. Adroit negotiating skills are required to maneuver
the sometimes treacherous waters spanning the diverse functions.
Externally, purchasers negotiate competitively with entities up and down the supply chain and
across networks. Whether the external relationships are friendly, adversarial, or somewhere in
between, accomplished negotiating skills are a fundamental success requirement. For
relationships spanning the spectrum from transactional to value-added to collaborative
exchanges (Day, 2000), negotiating prowess plays a pivotal role in navigating parties toward
the appropriate and beneficial outcomes.
Given the pre-eminence of negotiating in so many aspects of organizational life, especially in
supply-related areas, it is incumbent upon practitioners to search for and examine alternative
perspectives to enhance negotiating practice. One such opportunity to improve negotiating
practice is the application of a marketing-oriented approach. Marketing offers a fresh, dynamic,
and active vantage point from which to study and practice negotiating in simple and complex
supply environments.
Why Marketing and Why Now? Increasingly organizations are adopting very strong
marketing orientations that permeate every single aspect of the firm’s behavior. Moorman and
Rust (1999) offer the following observations regarding marketing in the organization:
“…it appears that during the past ten years there has been a movement toward thinking
of marketing less as a function and more as a set of values and processes that all
functions participate in implementing.”
“…several empirical studies of business organizations indicate that an organization wide
market orientation has a positive impact on the financial performance of firms and their
new products.”
The above quotes add immense evidence to the growing drumbeat of advocates suggesting
the need for a strong market and marketing focus in organizational processes, both internally
and externally. Traditionally marketing has been construed as an externally-focused set of
processes. However, marketing practice is equally appropriate for internal organizational
processes as well.
Why now? As organizations grapple with ever-increasing competition, global markets,
resource constraints, a changing workforce, more market variety, a greater need to innovate
more quickly, there is perfect confluence of timing, performance imperatives, and other
demands that make marketing the ideal mechanism from which to enhance negotiating
effectiveness. Marketing is an integral part of both buying and selling. Given the current role of
marketing in all exchange processes, why not elevate its presence as a practical performance
tool in negotiating?
Marketing also provides a great conceptual home for better understanding negotiating. More
specifically, both marketing and negotiating can be explained from three distinct, but related
conceptual perspectives – exchange theory, living systems perspectives, and relationshipbased approaches. Exchange is at the core of marketing. Kotler and Levy (1972) suggested
that marketing should answer two key questions: (1) Why do people and organizations engage
in exchange relationships? (2) How are exchanges created, resolved, or avoided? These two
questions also embody the core of negotiating.
The living systems perspective of negotiating is defined as a ‘motivated process of information
exchange between or among living systems with the general goal of reaching agreement about
certain joint or reciprocal acts’ (Tracy, 1995). Negotiating is viewed as a process combines two
or more social systems in dynamic exchange. The exchange is symbiotic. This symbiosis is
also at the core marketing.
Relationship-based approaches to marketing have gained considerable prominence as
alternative models from which to view buyer-seller phenomena. Given that exchange
processes are integral aspects of every relationship, it stands to reason that negotiating is also
a relational phenomenon. Whether the relationship is transactional or collaborative, some
value is created and delivered. This is exactly what transpires in negotiating. Each relationship
involves some degree of value creation and delivery. Exactly ‘how’ the value is managed is the
key topic of both marketing and supply. Among the intervening variables is negotiating.
Practical Application/Example of the Marketing/Negotiating Marriage. Given the
conspicuous similarities between marketing and negotiating at the conceptual level, it is a
natural leap to the applied arena. Moreover, the negotiating process can be compared directly
to the steps or phases in the marketing process. The usual steps in the marketing process
include:
(1)
Analyzing market opportunities
(2)
Developing marketing strategies
(3)
Planning the marketing program
(4)
Managing the marketing effort (Kotler and Lane, 2006; Mullins, Walker, Boyd, Larreche,
2005)
Analyzing Market Opportunities
Marketers are quite adept at identifying and responding to needs or gaps in the marketplace.
The marketing process normally encompasses analyzing and delineating market opportunities,
developing and crafting strategies to make the most of the opportunities, formulating a specific
marketing program, and managing and measuring the marketing effort.
The starting point for marketing is marketing opportunity. Marketing opportunity is basically a
‘gap’ in the marketplace where some category of need is not being satisfied sufficiently. This
gap represents a chance to design a product, service, or idea to match the expectations in the
marketplace. It is an opportunity to offer value. Opportunity is unveiled quite often through
research and canvassing external environments.
The same concepts apply to negotiating. Negotiators market ideas, concepts, and their
positions on the issues at hand. Negotiators spot marketing opportunity by positioning their
thoughts from the perspective of the other side. Positions are developed based on research,
market intelligence, timing, and a host of other factors that converge to influence the choice of
positioning strategies. The entire exchange equation is assessed in terms of how best to
maximize the ‘gap or opening’ perceived in the marketplace of ideas. As negotiators become
more sophisticated at assessing opportunities through research, numerous benefits are likely
to accrue.
Marketing Strategy Development
Once marketing opportunities have been identified and the research analyzed, the next phase
focuses on developing a strategy that will lead to the satisfaction of the needs and
expectations of both buyers and sellers of ideas, products, and services. A key component of
this phase is to position the idea among those competing for attention. The main question
becomes, ‘given product or service or idea space, where is the greatest opportunity’?
The same marketing strategy perspective applies to negotiation strategy from the angle of
negotiating posture or positioning, goals of negotiating, and the way in which the negotiating
process is implemented. Strategy really represents the underlying conceptualization and
execution of a plan of negotiation action. Negotiation strategy is not random or haphazard, but
carefully devised based on goals, vision, and underlying philosophies on both sides.
Negotiators, just as marketers, make choices about where and how to approach certain
exchanges. These choices affect subsequent decisions regarding negotiating tactics and
techniques.
Planning the Marketing Program
After devising the appropriate strategy, the next challenge is to actually plan the marketing
program. This includes determining the appropriate mix of the product, price, promotion, and
distribution variables. The nature of the marketing mix is dependent upon the needs and
characteristics of the various market segments. Each market segment has separate,
identifiable needs and expectations. Just as there are market segments there are also
negotiating segments with various expectations that must be met. Those needs and
expectations are met by designing and implementing appropriate marketing mixes.
The product or service or idea represents what is being marketed or negotiated. Something of
value is being exchanged. Different variations of products/services/ideas are offered for
consideration of the other party, either buyer or seller. Each of these is offered for sale for
some price or some monetary value that is important to each party. Value is
negotiated/marketed throughout the process.
Communications strategies are also part of both the marketing and negotiating mixes.
Messages must be fine-tuned to match the exact communications needs and expectations of
the other party. Communications in both marketing and negotiating must occur from the frame
of reference of the other party. Communications vary in style, tone, and structure in order to fit
the needs of the ‘customer.’ Lastly, the distribution component of the marketing mix is
considered. The key focus is on the best logistical approach to use to accomplish both
marketing and negotiating goals. In both arenas, choices concerning time, place, and location
are vital components of the mix.
Managing the Marketing Effort
Once the entire marketing program has been planned, skillful implementation and execution
will be critical success factors. For both negotiating and marketing, adroit execution of the plan
is essential. Specific attention is focused toward the ‘actors’ in both marketing and negotiating
and how they carry out their respective roles. For each of the actors it is critical to determine
strengths/weaknesses, perceptions of value, negotiating/marketing style, and time and
competitive constraints.
Summary. Given the competitive dynamics surrounding negotiating experiences, it is
important for negotiators to consider different perspectives to strengthen their negotiating
stance. Marketing offers one possibility. Negotiators are marketing ideas and services. Given
this backdrop, they should use specific marketing tools and techniques in the development and
execution of negotiation strategies. They should consider market assessment (information and
market intelligence regarding the other party), market segmentation (understanding the
different categories of needs of the other party), marketing strategy development
(understanding the idea, product, or service being negotiated from the perspective of the other
side), and creating and delivering value throughout the negotiating process as marketers do in
customer segments.
Since negotiators are really marketers, they should embrace marketing concepts
overwhelmingly and integrate these perspectives in negotiating training and in the actual
negotiating encounters, both internally and externally. As supply practitioners focus on
continuous renewal in all areas, a marketing approach to negotiating offers considerable
promise as a managerial tool.
REFERENCES
Day, George S., ‘Managing Market Relationships,’ Journal of the Academy of Marketing
Science, 28 (Winter 2000), 25.
Kotler, Philip and Kevin Keller, Marketing Management, 12th Edition, Pearson/Prentice-Hall,
Upper Saddle River, NJ, 2006.
Kotler, Philip and Sidney Levy, ‘Broadening the Concept of Marketing,’ Journal of Marketing,
(January 1969).
Monczka, Robert, Robert Trent, and Robert Handfield, Purchasing and Supply Chain
Management, 3rd Edition, Thomson South-Western Publishers, 2005.
Moorman, Christine and Roland T. Rust, ‘The Role of Marketing,’ Journal of Marketing,
Volume 63 (Special Issue 1999), 180-197.
Mullins, John W, Orville C. Walker, Jr., Harper W. Boyd, Jr., and Jean-Claude Larreche,
Marketing Management: A Strategic Decision-Making Approach, 5th Edition, McGraw-Hill
Irwin, 2005.
Tracy, Lane, ‘Negotiation: An Emergent Process of Living Systems,’ Behavioral Science, 40,
1995, 41-55.